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An appeal by the Bush administration appeared certain in the latest incident to strain relations with the European Union: a ruling that tax breaks for American exporters violate international trade rules. The decision late Friday by the World Trade Organization, in a complaint brought by the EU, finds $4 billion in tax exemptions are "a prohibited strategy" for which the Europeans may be entitled to compensation. The provision allows US exporters, mainly large multinational corporations, to exempt some of their profits from taxation by making sales through foreign subsidiaries. It was rewritten by Congress last year after an earlier EU complaint also brought an illegal finding. But the Europeans, still not satisfied, complained again. The Bush administration has hinted that if the EU pushed its case too far, the US could raise concerns with the World Trade Organization about European corporate tax-preference policies.

At least some Comair service was expected to resume by July 12 after the carrier's striking pilots ratified a new five-year contract. The vote, announced Friday, was 733 to 408. The pact gives the pilots the highest pay among those in the regional airline industry. Comair is owned by Delta Air Lines, which put the cost of the strike at up to $2 million a day.

(c) Copyright 2001. The Christian Science Monitor

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